The Observer reports today that the health secretary, Andrew Lansley, is planning to introduce regional pay bargaining into the NHS, meaning that staff in poorer areas will be paid less than those in London and the south east. Astonishingly, the only proposed exception to the new policy would be already highly-paid managerial staff working to deliver Lansley’s unpopular reforms to the health service.
Defending the special arrangements, the Department of Health argues that they are necessary in order to:
Attract and retain high-calibre leaders and staff responsible for transforming delivery.
The department fails to explain why such measures are only needed to attract staff responsible for transforming delivery, and not also to attract staff in other important roles in the NHS such as doctors, nurses, hospital porters, cleaners and paramedics.
The move by the health minister comes in response to a wider government programme to introduce regional pay bargaining into all parts of the public sector. In his budget last month, George Osborne announced:
We’re also looking to see whether we can make public sector pay more responsive to local pay rates. It is something the last Government introduced into the Court Service. London weighting already exists across the public sector. Indeed, the Opposition have proposed the interesting idea of regional benefit rates.
So we should see what we can do to make our public services more responsive, and help our private sector to grow and create jobs in all parts of the country. We’ve asked the independent Pay Review bodies to look at the issue. Today, we publish the evidence that the Treasury are submitting to them. And some departments will have the option of moving to more local pay for those civil servants whose pay freezes end this year.
Responding to the news, Labour’s shadow health secretary Andy Burnham told the paper:
National pay is part of what underpins a truly national health service. Labour will defend it, as it is fair to staff, helps control costs and brings stability to the system.
It is often harder to work on the NHS front line in more deprived parts of the country and yet this government wants to pay those staff less and reinforce the north-south divide. It will infuriate NHS staff to see senior managers arguing for one rule for themselves, and another for staff. They are seeking to insulate themselves from these changes, while driving down pay for thousands of front-line staff across the country
Regional pay bargaining is particularly controversial in the health service due to its status as the largest single employer (verging on monopsony) of health professionals in the UK. Without the opportunity to take their labour elsewhere, employees are unable to ensure through normal market forces that the wage they are paid is competitive.
Arguing in favour of regional pay, the departmental document suggests:
Setting a national basic pay rate at a “minimum level necessary” and paying additional supplements in particular geographical zones.
It says: “Current rates of pay in the NHS do vary geographically, but significantly less so than the pay of comparable staff in the private sector. The introduction of more sensitive market-facing pay would therefore enable more efficient and effective use of NHS funds.”
It further argues that “where the NHS pay premium is relatively high there is the potential for private sector enterprise to be crowded out with adverse impact on the prospects for local economic growth.”